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CURRENCY : Dollar Hits Lowest Level Since June on Trade News

Associated Press

Money traders dumped dollars Thursday and depressed the currency to the lowest point since early summer in a selloff that many blamed on the government report of a bulging monthly trade deficit for August.

Gold prices eased in Europe and the United States in what bullion brokers described as an internal market reaction to the metal’s rise on Wednesday. Republic National Bank in New York quoted gold at $406.70 an ounce at 4 p.m. EDT, down $1.80.

Foreign currency strategists said the Commerce Department report that showed the August trade deficit swelled to $12.18 billion, compared to $9.47 billion in July, wasn’t terribly surprising.

But the deficit figure confirmed to many traders that the dollar’s recent downward trend would continue and perhaps intensify, reinforcing their belief that it’s better to sell dollars rather than buy.

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“The trade number was not a great number,” said James Hohorst, director of foreign exchange trading at Manufacturers Hanover Trust Co. in New York.

‘Trend Established’

Frank Watson, chief corporate dealer at the New York branch of Swiss Bank Corp., said “the downward trend for the dollar, now less than 2 weeks old, is now established.”

James Chorek, technical analyst at the Chicago firm MMS International, said the dollar’s decline shattered what he considered significant levels relative to the West German mark and Japanese yen, meaning the dollar will move lower against those key currencies for the foreseeable future.

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The dollar’s 1.2% drop against the yen and 1% drop against the mark in New York trading brought the U.S. currency to its lowest level since late June.

Silver Eases

In Tokyo, the dollar closed at 127.98 yen, down 1.67 yen. Later in London, it was quoted at 127.95 yen. Later in New York the dollar fetched 127.42 yen, down from 129.02 yen late Wednesday.

In London, the dollar sank against the British pound. It cost $1.7470 to buy one pound, more expensive than $1.7305 Wednesday. Later in New York the pound fetched $1.7505, more expensive than its $1.7374 value Wednesday.

Other late dollar rates in New York versus late Wednesday: 1.8152 marks, down from 1.8344; 1.5317 Swiss francs, down from 1.5491; 1.2074 Canadian dollars, down from 1.2111; 6.1880 French francs, down from 6.2545; and 1,351.50 Italian lire, down from 1,366.63.

Other late dollar rates in Europe versus late Wednesday: 1.8193 marks, down from 1.8340; 1.5390 Swiss francs, down from 1.5587; 6.1995 French francs, down from 6.2770; 2.0475 Dutch guilders, down from 2.0760; 1,354.00 Italian lire, down from 1,379.00; and 1.2084 Canadian dollars, down from 1.2118.

On the Commodity Exchange in New York, gold for current delivery fell $1.50 an ounce to $406.90. Earlier in London it fell $2.55 an ounce to $406.70; in Zurich, Switzerland, it fell $1.60 to $406.50, and in Hong Kong it rose $2.69 to $411.22.

New York Comex silver for current delivery eased 1.7 cents an ounce to $6.303. In London, silver fell 6 cents to $6.29.

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